Positive Chinese manufacturing data boosts share market

Australian shares had risen by around three-quarters of a per cent by midday.

AFP

The Australian dollar and share market have both jumped on much better-than-expected China factory data.

The local currency jumped more than a quarter of a cent to 94.3 US cents after a private sector index of Chinese manufacturing easily beat expectations.

While analysts forecasts centred on a small improvement in the HSBC Flash China Manufacturing PMI, the index jumped from 49.4 last month to 50.8 points in June.

The reading above 50 indicates that China's manufacturing sector is again picking up speed, rather than slowing down.

Aside from boosting the dollar, the result has lifted Australia's major resources firms, which were already higher in early trade after Chinese iron ore spot prices jumped 1.5 per cent on Friday to $US92.10 a tonne.

Fortescue was up 5.6 per cent to $4.555 by 12:20pm (AEST), while Rio Tinto was up almost 3 per cent and BHP Billiton 1.5 per cent.

The major banks were also part of broad-based gains across the market, with National Australia Bank's 1 per cent rise leading the way, and the other three majors also higher.

Investment bank Macquarie was also up 1 per cent.

Telstra was 0.6 per cent higher, and the two major supermarket owners, Woolworths and Wesfarmers, had also gained around 0.7 per cent.

Their main domestic rival, grocery wholesaler Metcash which supplies IGAs, was up 2.9 per cent to $2.85, despite posting a 17.9 per cent slide in profit.

Ten Network shares were up 4.9 per cent to 25.7 cents after speculation in the Fairfax press that some private equity groups may be interested in buying out the struggling broadcaster.

Overall, the ASX 200 index was up 0.8 per cent to 5,463, and the All Ordinaries index was 43 points up at 5,445.